Our Supply, Our Demands: Part One

If San Francisco Bay Area’s relationship with Supply and Demand went public on Facebook, it would have to read “It’s complicated.” Much more complicated than polygamy, more difficult than monogamy, and far more annoying that the one-night stand that lingered a few weeks too long.

For those of you who had boring economics teachers, Supply and Demand is basically the fer shizzle of mainstream economic thought for the past three hundred years give-or-take. It’s simple at its core. If you produce too little of a product that everyone wants (and some are in a better position to take via income or wealth) the price goes up. If you produce enough or more than enough, then the market will produce lower-prices. Supply and Demand is central to the libertarian belief that a truly free-market will correct itself and ultimately deliver the most good to the most amount of people.

Never far from the surface of the housing debate in San Francisco is Supply and Demand. Those who worship at its temple portray it as the only lasting solution to the housing crisis. Simply put, they want San Francisco to keep building as much market-rate housing as the market could possible produce and eventually rents for all will go down. On the other end of the ideological battlefield, many assert that somehow San Francisco’s housing economy somehow exists in a world where scarcity doesn’t inflate prices. Both suffer from truly magical thinking the type found in Middle Earth or Hogwartz. (There are other perspectives that embrace parts of each argument, or reject them both. However, these poles are the ones that are setting the debate.)

Over the next few weeks I’m going to be presenting some arguments that will hopefully take the debate in another direction—grounded in the unique economic and political dynamics of the San Francisco Bay Area.